Unconstrained Equity. Ignore the noise.

A distinctive approach

In recent decades, the innovation of benchmarking, the rise of computer-based or ‘quantitative’ investing and the increased availability of near-term data has led to a shortening of investment horizons in public equity markets. We want to be different.

To generate compelling returns in public equities, we believe a long-term approach is required. After all, if you believe a company is genuinely differentiated, why erode its potential by trading based on short-term, often circumstantial information? You wouldn’t bet against Roger Federer in his prime because he dropped a set or it started raining during play.

The BlackRock Global Unconstrained Equity Fund seeks to:

The result? A collection of the very best businesses in developed markets, with a long-term mindset.

Manager skill risk: There is no guarantee that a positive investment outcome will be achieved. Concentration risk: Investment risk is concentrated in specific sectors, countries, currencies or companies. This means the Fund is more sensitive to any localised economic, market, political, sustainability-related or regulatory events.

An expert investment team

The Fund is managed by Alister Hibbert and Michael Constantis, two of BlackRock’s most proven equity managers with over 40 years of combined investment experience.* They harness the insights of the dedicated Strategic Equity Team to select holdings and manage the portfolio on an ongoing basis.

The team draws on BlackRock’s global network of investment insights across both public and private markets and different asset classes, providing real-time insights from company interactions around the world. We believe this is a crucial advantage when managing unconstrained equity portfolios: it can help uncover new investment opportunities and also identify potential sources of disruption or structural change that might impact existing holdings.

Our investment approach may be simple, but choosing the investments is not: we believe being located at the epicentre of this information ecosystem can significantly enhance our chances of success.

*Source: BlackRock, 29th February 2024. There is no guarantee that a positive investment outcome will be achieved.

Identifying long term opportunities

Being ‘unconstrained’ means we do not simply look to tilt away from a benchmark. Instead, we start with a blank sheet of paper to build the very best portfolio we can based on individual company analysis. Our selection criteria is driven by four key attributes that we believe indicate the potential for long-term compounding.

What makes us different from most is the questions we ask. We focus only on a company’s ability to sustain its returns, reinvest cash flows in attractive new areas of growth and differentiate itself from the competition as new technologies, regulations or preferences emerge.

Relatively few businesses meet these strict criteria, meaning we will typically invest in 20-30 companies at any one time. This provides, in our view, enough diversification to build a fundamentally resilient portfolio while taking larger position sizes to allow company performance to drive portfolio returns.

Manager skill risk: There is no guarantee that a positive investment outcome will be achieved.
Concentration risk: Investment risk is concentrated in specific sectors, countries, currencies or companies. This means the Fund is more sensitive to any localised economic, market, political, sustainability-related or regulatory events.

We adopt a real-world risk approach to ensure we focus on business fundamentals. Portfolio turnover is expected to be low and we have very strict trading criteria to reinforce this, avoiding the temptation of trying to time unpredictable market gyrations in the short-term.

Our strict trading criteria:

Change in the long-term investment case

We will act if the structural outlook of a business fundamentally deteriorates. We do not trade for cyclical reasons – great businesses dominate over decades not quarters

Portfolio resilience

We ensure the portfolio has at least half its assets in earnings and cash flows that are fundamentally resilient to the economic cycle

Valuation extremes

Occasionally, extraordinary opportunities arise from extreme market conditions – we will act on these

Competition for capital

Our research process uncovers a superior long-term investment opportunity, which warrants displacing an existing position

Manager skill risk: There is no guarantee that a positive investment outcome will be achieved.
Concentration risk: Investment risk is concentrated in specific sectors, countries, currencies or companies. This means the Fund is more sensitive to any localised economic, market, political, sustainability-related or regulatory events.

Client portfolio perspectives

The Fund is actively managed and aims to provide a return on your investment (generated through an increase in the value of the assets held by the Fund) over the long-term. We believe that over a longer time horizon (5 years or more), the MSCI World Index is an appropriate proxy to use to evaluate the success of the Fund.*

Unconstrained equities strategies can be used in many ways within a client portfolio including:

*Please refer to TMD details at the top of this page for more information.

Note: The active share references the portfolio managers’ current process, which is subject to change without notice. Number of stocks are also subject to change.

Source: BlackRock, 29th February 2024. For illustrative purposes only. This material is provided for informational purposes only and is not intended to investment advice or a recommendation to take any particular investment action.

*The MSCI World Index is used by the Investment Manager for risk management purposes to ensure that the degree of deviation from the index remains appropriate given the Fund’s investment objective and policy. The portfolio management team does not believe this will represent a constraint on the portfolio day to day and will not be anchoring to any tracking error or benchmark in the normal running of the portfolio.